A message about the market's reaction to Coronavirus
Brett D. McKamey CFA
Given recent events, extreme volatility, and understandable concern, we want you to know we are very much present and assessing new information as it becomes available. We have a long-established business continuity plan in place, designed to ensure the safety of our staff and visiting clients and to ensure we are available for you at any time.
As is so often the case, bouts of extreme market volatility are generally triggered by unforeseen events and culminate in capitulation and panic selling. Are we there yet? Impossible to say, but we do know this much: extreme measures are now being taken to address the spread of coronavirus; it will have a meaningful adverse impact on our economy, likely for the next two to three quarters; and the headline risk as more cases are identified will continue to negatively impact investor psychology for some time.
And yet amid the fears and the quarantines, it's been easy to lose sight of the fact that most people who have contracted the coronavirus have fully recovered. It’s true that the virus has proven to be especially troublesome for older adults and people with existing health problems. But for most healthy individuals, the novel coronavirus creates mild or moderate symptoms, such as fever and cough, and the vast majority recover quickly.
We remain confident that as spring turns to summer, the current fog of uncertainty will have begun to lift, much as it has in China, and we’ll have a clearer picture of the economic impact. Our view, shaped by over 50 years of professional investment experience, is that acting on emotions surrounding near-term uncertainty has rarely been constructive to long-term investment results. And discipline and patience are never more rewarded than during trying times.
We have experienced numerous periods of extreme market volatility over the years and, as investors in common stocks, will undoubtedly do so many times in the future. As you know, our investment strategy addresses the issue of volatility through appropriate asset allocation (stocks, bonds, cash, and other diversifying assets). Communication is essential, never more so than during these occasional periods of heightened uncertainty and extreme market turbulence. If the current volatility is causing concern, or if your financial situation has changed to the extent that it may affect your investment objectives, please contact us so we can discuss your circumstances.
Most of all, we sincerely appreciate the opportunity to serve as your investment advisor. Take good care of yourselves and thank you for your continued confidence.
Brett D. McKamey, CFA